Informal Trading Citichat 1 March 2002

CITICHAT 8/2002 - 1 March 2002


Informal Trading

There has been a lot of publicity lately regarding the clamp-down by the city's Metro Police Department on informal trading/street vending/hawking. Headlines in the press have ranged from "Cops, hawkers clash in Joburg" and "Irate hawkers to take Joburg Council to court" to "Hawkers put urban prosperity plans to the test." The latter article uses language such as "the battle between hawkers and officials for Johannesburg's streets intensified this week" A Hawker Association representative is quoted as saying "We want to bring to an end this control over the informal sector" - hawkers are quoted as saying that the city is targeting the poorest section of its constituency whilst the City Manager is quoted as saying that the Metro is having “to deal with anarchy.” Hawker associations claim that the City's informal trading markets are disasters whilst the City's Markets Company head claims that the markets are full and being supported by the public! It is virtually impossible to get any sense out of the rhetoric and emotions that are running riot but let's have a look at some background to the current approach to informal street trading in the city.

Informal street trading has been a part of Johannesburg literally since the city's founding in 1886. And so, it would appear, have been the attempts to control it. Apart from local bylaws, national legislation going back to the 1923 Natives (Urban Areas) Act and subsequent apartheid legislation such as the Natives (Urban Areas) Consolidation Act No. 15 of 1945 all sought to strictly control and restrict not just hawking but even formal businesses in ‘townships.’ Professor Keith Beavon in the 1989 publication ‘Informal Ways’, recorded what the approach was up to just a decade ago - “action can legally be taken against the hawkers if they do not move a certain distance in a certain amount of time, or action can be taken if they are trading without a license or without having the license with them. Action can also be taken if the hawkers are seen to be blocking either the road or pavement on, or alongside which, they operate. It is also possible for action to be instituted on the basis of a complaint received from an unidentified member of the public or from a shopkeeper who believes hawkers are competing unfairly with his shop. Actions can vary from spot fines to arrest and confiscation, as well as the destruction of the hawker’s commodities.” All of this applied right up to the beginning of the ‘90s. The pendulum was heavily weighted against informal trading!

You may wonder, as I did when we were researching hawker bylaws some years ago, about the reference to “moving a certain distance in a certain amount of time.” In fact what was called for was that the hawker was not allowed to trade for longer than 20 minutes in one place and then was required to move at least 25 metres from the spot that they had been trading from. Although this was still operative up to the beginning of the ‘90s, its origin was actually from the early ‘30s! A group of pavement sellers known as the ‘Cheap Jacks’ operated in Johannesburg in the early ‘30s. They weren’t traders but actually were confidence tricksters who sold cheap goods to a gullible public with the assistance of a number of accomplices. A Cheap Jack would stand on a box or stool on the pavement attracting a crowd of potential buyers with typical cockney patter and wild exaggeration about the cheap goods that he was offering, whilst his mates would pick the pockets of the crowds who had gathered around. As this caused an obstruction to pedestrians and an irritant to formal retailers, legislation known as the ‘move-on’ regulation was introduced and was kept conveniently in place and misapplied for nearly sixty years after the reason for the bylaw had been eradicated!

In the early ‘90s, with pending democratic changes clearly in the offing, all the country’s offensive legislation came under scrutiny. In May 1991 all restrictions which had denied disadvantaged communities opportunities to start businesses were removed but, rather like ‘throwing the baby out with the bath-water’, so were all protective measures. The City Council of the time, the last ‘illegitimate’ council, decided that it would not repeal its regulations but would not enforce them. Unfortunately it also chose not to manage the resultant situation. Informal trading mushroomed in the city, I seem to remember figures of 250 licensed traders in the early ‘80s ‘which in the early ‘90s now rose to a reported 12 000, although this was probably closer to 5 000. The pendulum had swung back in the favour of the hawkers with a vengeance!

In 1993 the Central Johannesburg Partnership (CJP) established an Informal Trading Forum bringing around the table representatives of Hawker Associations – of which there were many at that time - with formal retailers and businesses operating in the city as well as city council officials The idea was to develop a new policy - instead of YOU MAY NOT TRADE UNDER ANY CIRCUMSTANCES the policy was rather YOU MAY TRADE PROVIDED THAT…. The new bylaws we crafted provided a code of conduct for traders and practical bylaws which allowed trading only on pavements that were wide enough to permit both trading and reasonable pedestrian access; restricted trading against retailers’ windows, restricted selling of goods that were in direct competition with the formal shops the traders were in front of; provided the the council the authority to restrict trading in certain areas, or to restrict times of trading or goods to be traded. There was a lot of give and take in the negotiations, but we felt that we had moved forward positively with the objective of bringing the pendulum into a far more neutral position. In the meantime, the deterioration in the urban environment had become pronounced and a large number of formal retailers had left the city.

At this stage bureaucracy and inter-governmental ‘turf wars’ appeared to take over. The bylaws were finally only put in place in mid 1998, some three years after agreement had been reached in the Forum. A Council enforcement team was established and an education and bylaw awareness programme was launched but the promised enforcement never materialised on a sustained basis. The streets became more and more unmanaged and a great many formal retailers lost faith in the Council perceiving there to be a lack of political will to enforce the bylaws and left the city. The quality of formal retail went into a sharp decline. But the Council was starting to count the cost of the laissez-faire management approach of the past few years. The cleaning of the city as a result of waste generated from hawking had become much more difficult requiring substantial increases in staffing and therefore cost. Stormwater drains were continually blocked by litter and refuse emanating from hawkers. The deterioration in the public environment became pronounced. It was clear that action had to be taken. A fresh study was undertaken which involved large scale interaction between the consultants and all the role players. As opposed to most previous studies, it focused heavily on developmental issues. The resultant recommendations were work-shopped and accepted – certain areas of the city where informal trading was considered to be inappropriate would be declared restricted trading areas and the quid pro quo was that informal trading markets would be established. Apart from some linear markets, the pavements of the CBD would be trading-free. The hawker associations were unhappy, one suspects that their unhappiness was more to do with losing a degree of control than with promoting the best interests of the hawkers themselves. Some associations appeared to go out of their way to undermine the projects and processes that were being put in place, and the rhetoric level increased dramatically. On the other hand, the initial resultant projects and processes appeared to generate a number of major operational problems that disadvantaged some of the traders. Corruption seems to have also been part and parcel of enforcement which appeared to be selectively targeting traders who were trading illegally. Confiscated goods disappeared between the place of confiscation and the storage facility. The pendulum was now yo-yoing!

Where does this tale of oppression, freedom, over-compensation, attempts to provide a rational framework, lack of enforcement and the new resolve to address the issue lead? Apart from the current war of words and legal action that is! Firstly, whatever is done, on both sides, must be done within the boundaries set by legislation, if we cannot agree to that then we are no better than a banana republic. Secondly, there needs to be a recognition of the economic difficulties of a large number of people who are desperate to earn a living. But, this latter point needs to be balance by the need for the hawking community to accept that it does create practical problems for the city and its other stakeholders. (In reviewing some of our documentation on the subject I came across a 1991 report on street vending in the city of Philadelphia, Penn. It clearly states that the unmanaged hawking at that time had “negative effects on the image of the business district and pedestrian movement, unfair competition with stores and restaurants; generation of litter and liability exposure among property owners.” We are not unique, many cities struggle with these issues.) Thirdly, whatever we do must now fall within the reality of the long-term over-riding vision for the city as enunciated in Joburg 2030. Essentially this is that a ‘better city’ and a ‘better quality of life for its citizens’ is fundamentally based on growing the city’s economy.

For the past few decades the economy of the city has been shrinking and therefore it has not been a ‘better city’ nor provided ‘a better quality of life’ for its citizens. Can this all be blamed on informal trading? Absolutely not, but it is very much part of the problem, part of the decline. There have been many factors that have led to the city’s deterioration, poor planning decisions, lack of urban management, lack of enforcement, crime and a host of other issues. How does one quantify the earnings capacity of informal trading on the one hand with the cost to the city on the other.? I’m no economist but I did attempt to at least get a feel for the answer to that question. Although there are a number of blanks which require one to make judgement calls I came to a conclusion that

1. The nett income – profit – derived by hawkers in the CBD could be between R50 and R100 million per annum. (which is untaxed in terms of both city rates and taxes and personal tax.)

2. The nett loss to the city in terms of excessive office vacancies and depressed rentals

- both office and retail space – is R1.2 billion per annum.

3 This figure excludes (a) the reduced economy in the city through both lack of ‘feet’ and through (b) lack of ‘quality of feet’, (c) additional costs of cleaning, repairs and maintenance of the city’s infrastructure and, (d) the 50% reduction in rates income through the new valuations. I don’t know how these would all be quantified but the R1.2 billion could well be R2 billion per annum.

The judgement call is how much of the ‘cost to the city’ is purely brought about by informal trading? If only 10%, then the negative impact of informal trading could be R200 million per annum; if 25%, then the negative impact could be R500 million per annum. Based on my calculations, it would appear as if the annual income of R50 to R100 million in the pockets of informal traders in the CBD has been ‘bought’ at a price of anything from R200 to R500 million per annum.

Government that allows unmanaged informal trading is doing neither the towns/cities nor the informal traders a favour. The economic results of unbridled informal trade can be seen from my admittedly rather crude workings. Informal traders deserve better than they are getting - they must be given every opportunity to develop and grow their skills and their income – they have little chance of doing this on the streets. Why should thousands of people be condemned to operating on pavements with no proper shelter, no storage or toilet facilities, exposed to the high degree of pollution that our cities generate? Why should hundreds of thousands of city users have to endure pavements that are difficult to navigate and filthy and that impact negatively on the city’s ambience? But then how do we also retain and celebrate our Africanness? Are markets the answer? We will do far better for the city and all its stakeholders, which clearly includes informal traders, if we adopt a pragmatic rather than an emotional approach to solving the problem. I believe that the current ‘market plan’ is just such a pragmatic approach. If corruption can be eliminated – and I don’t believe that corruption is limited to just one party – and if implementation can take place in the best interests of the city and of informal traders, we can get that pendulum to finally come to rest plumb in the centre. And everyone wins!



Regards, neil